China plans to grant securities licenses to commercial banks: Caixin

By Minyoung Park · June 29, 2020

China’s securities regulator is planning to grant securities licenses to commercial banks as part of a wider effort to help domestic businesses compete with foreign rivals, Chinese business news site Caixin reported on Sunday. 

The pilot scheme may involve at least two major commercial banks getting the go-ahead from the China Securities Regulatory Commission to begin their investment banking businesses, sources told the outlet.   

Currently, many Chinese banks provide investment banking services through their Hong Kong-based subsidiaries.

In 2018, Industrial & Commercial Bank of China, the world’s largest lender by assets, submitted a proposal to the commission to start a pilot program that would establish a securities subsidiary with registered capital of ¥100 billion ($14.1 billion), Caixin said.

The bank did not respond to a request for comment. 

On Sunday, a commission spokesperson said in response to the report of the pilot program that there were multiple paths being discussed to help the development of investment banks to expand direct financing in China. 

The spokesperson added that whichever path is implemented, it may not have a significant impact on the industry’s current structure.  

The securities regulator’s move is due to rising competition from foreign investment banks, according to Caixin. Global investment banking giants have received approval from the commission to raise stakes in their Chinese securities joint ventures to 51%, including UBS in November 2018, both Goldman Sachs and Morgan Stanley in March this year and Credit Suisse in April. 

In March last year, both JPMorgan Chase and Nomura received approval from the regulator to set up new securities joint ventures in China with majority foreign ownership.

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